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Case for Lloyds doing right thing for social wellbeing

For anyone in the financial services community concerned about the image of bankers, it will make depressing reading.

Lloyds Banking Group's successful Supreme Court action against its associated charitable trust in Scotland, minimising the amount it must pay out to the charity, will do nothing to change the view of those who are inclined to see Britain's big banks as self-serving and disengaged from the communities they serve. It is not quite the sort of public relations coup the Trustee Savings Bank Group must have had in mind when it set up the trust back in 1985.

For the Lloyds TSB Foundation for Scotland, however, it is far more serious. The charity, which helps disadvantaged people in Scotland, is now entitled to barely more than 1% of what it stood to gain before yesterday's Supreme Court decision. That money would have made a huge difference to the community projects the foundation tries to support in Scotland, from schemes working with young homeless women to dementia day care centres, at a time when charities are facing serious financial challenges.

The statistics are sobering. Donations to charity UK-wide were down 20% – £1.7bn – last year on the previous year, according to the UK Giving Report, the biggest drop it has recorded in its eight-year history. In September, the Scottish Council of Voluntary Organisations (SCVO) warned that the funding situation for charities had become so serious that reserves were running out for small and medium-sized organisations. At a time such as this, with public donations on the slide, charities have no alternative but to look to big business and Government to help them fund their work. It is regrettable that a bank would go to such expensive lengths to reduce its commitments to the trust that bears its name.

Lloyds does not have money to burn, as was made abundantly clear yesterday by the announcement that it is to shed 135 more jobs. Nevertheless, if banks are to win the battle of hearts and minds with a sceptical and mistrustful public that questions their commitment to the communities they serve, episodes such as this will do very little to help.

The ruling that the foundation is entitled to just £38,920, instead of the £3.5 million it had expected, does not mean the bank could not choose to donate more. The £3.5m would have been an impressive sum, but £38,920 seems paltry by comparison. In September, speaking at the CBI Scotland dinner, Lloyds' boss António Horta-Osório insisted the bank tried to do the right thing, adding that he believed Lloyds could and would "make a real positive contribution to the economic and social wellbeing of this country".

That being so, the bank should now rise above its mere obligations, as determined yesterday by the Supreme Court, and improve upon the £38,000 it now owes.

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